March 5 (Bloomberg) -- A U.S. carbon-trading program would slow reductions in industrial greenhouse gases as volatile carbon prices discourage anti-pollution investments, said Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.

Since December, Tillerson has been publicly telling lawmakers that adoption of a carbon-trading system akin to that used in the European Union would be ruinous to the U.S. economy. A carbon tax would work better because it would eliminate most of the volatility inherent in buying and selling emission credits, he said today.

“A cap-and-trade system is going to be opaque to consumers and, I would argue, even to investors,” Tillerson said today in a meeting with reporters in New York. “That’s been our experience in Europe, where prices have been very volatile. When prices are very volatile you tend to do things at the edges and avoid making significant changes right away.”

Tillerson, entering his fourth year as leader of the world’s largest gasoline producer, said he shares President Barack Obama’s goal of lowering greenhouse-gas emissions linked to climate change.

“The objective is to cause people to alter their behavior and change the choices they make,” Tillerson said. “The best way to do that is when people have clear information on what the costs are to them.”

Irving, Texas-based Exxon may face $2.8 billion a year in extra costs to comply with carbon limits at its oil-sands projects in northern Alberta within the next decade, more than any other oil-sands producer, Yulia Reuter, an analyst at Innovest Strategic Value Advisors, said yesterday in a note to clients.

To contact the reporter on this story: Joe Carroll in New York at jcarroll8@bloomberg.net.

Last Updated: March 5, 2009 13:10 EST